Limited Government and Free Market Views in Delaware

Reasons to Revise or Repeal the Renewable Portfolio Standard

1) Delaware has to compete for jobs nationally and globally. Individual state energy policies lead to higher energy costs and leave us at a competitive disadvantage. Energy policy should be a national initiative. The separate Delaware RPS should be repealed.

2) Delaware has one of the most aggressive total RPS requirements and the highest solar carve out east of the Mississippi. This will lead to Delaware having higher electric rates than other states leaving us with a competitive disadvantage. Reductions in the standards are a must. (Based on US DOEnergy Database of State Incentives for Renewables and Efficiency)

3) Delaware has limited in-state renewable resources. An offshore wind farm has already failed because of cost, we have no useful onshore wind capability (according to US DOE wind resource charts), we have poor solar resources compared to sunnier states, and Delaware has very limited geothermal and hydro power prospects. For the most part we are paying higher electricity prices to fund out-of-state economic development. We should reduce the RPS requirements to what is already in place.

4) Most onshore wind used in Delaware is produced from wind farms on mountain ridges in western Maryland and Pennsylvania (based on Delmarva Power 2010 IRP). Transmission loses from moving power from this distance rival loses for power imported from western Pennsylvania during peak summertime loads but wind power always has this transmission loss. These transmission losses lower the positive environmental benefits of onshore wind and make power produced in Delaware with fossil fuels more attractive. Repeal the RPS.

5) In 2010 70% of solar modules installed in the U.S. were imported and the % is growing (US DOEnergy). On average, 50% of the installed cost of modules is in the modules themselves. In Delaware solar installations receive about 50% of the cost back in federal and state grants. Therefore, we are transferring those grants to foreign companies. Do we really want our tax dollars moving overseas on a so vast scale? Restricting or ending the RPS will stop that direct flow of tax dollars overseas.

6) Our RPS is supposedly supporting a solar manufacturer, Motech, in Delaware. But Motech imports the solar cells from Taiwan and only assembles here. Even if all the solar panels used in Delaware were Motech panels we would only represent a few percent of their production accounting for half a dozen jobs. New solar installation jobs have barely replaced the 350 jobs lost at Motech since 2003 when solar cell manufacturing stopped. Repeal the solar carve out. (Based on CRI study)

7) Our RPS supports solar installation jobs here. However, those jobs are temporary jobs. Solar panels require almost no labor after installation. Solar increases the cost of electricity four to five times and that higher cost negatively impacts jobs throughout the economy. For example, installation of the Dover Sun Park added the equivalent of 28 jobs for a year according to press releases. Extrapolating the installation labor to meet the RPS suggests 65 installation jobs can be supported through 2025. However, the higher cost of electricity will eliminate 600 jobs! Nine jobs gone for every one created. Repeal the solar carve out. (CRI study, $90 million a year premium divided by $147,000 premium results in one lost job)

8) Typical residential solar projects cost $30,000 to $40,000 in initial investment and payback of the investment takes five to seven years (data from Renewable Energy Task Force). Only the affluent have the money for that. Meanwhile, the Delaware grants and payments for energy credits are paid for by every electric customer. This amounts to a transfer of money from the poor to the rich! End this “green” war on the poor and middleclass by repealing the RPS.

9) Renewable power is still just too expensive. Power from the Dover Sun Park, for example, is three times more expensive than power from three recently completed onshore wind farms supplying power to Delmarva Power Based on Dover Sun Park contract and 2010 Delmarva Power IRP). Further, that wind power cost is twice as expensive as power from a new clean burning natural gas fired electric generating plant Based on US Energy Information Agency). We should be building natural gas plants and repealing required use of wind and solar.

10) There is evidence government subsidies are keeping the price of alternative energy sources such as wind and solar artificially high. One CRI estimate is residential solar installations might be 25% less expensive without subsidies ($4.25/watt vs. $5.75/watt). Remove the decades old subsidies and let these products compete in the market place.

11) Delaware’s solar carve out is out of line with other states. Delaware already has the highest solar carve outs of the 26 states plus the District of Columbia east of the Mississippi at 3.5%. Fifteen of those states have no solar carve out and most of the rest require less than 1% solar. The solar carve out should be reduced drastically or eliminated. (Based on CRI summary of US DOEnergy database)

12) Europe began these programs ten years before us and is now running away from “green” subsidies as fast as possible in the face of minimal positive impact on the environment and a very large negative impact on the economy caused by rapidly rising electricity prices. For example, Germany spent $130 Billion on solar subsidies, has 40% of the world’s solar installation, and receives 3% of its power from solar. We are wasting our money on a similar failed approach. (Based on news reports from Washington Post, Bloomburg News, and elsewhere)

13) In view of developments around the world a review of energy policy seems timely. Germany, with nearly 40% of the world’s solar installations, has already reduced subsidies 40% this year. Italy will stop accepting new solar installations into its subsidy program later this year. Spain has suspended renewable energy subsidies. The Netherlands ended renewable energy subsidies last year. The UK is considering major reductions in subsidies. We should reduce or eliminate ours. (Based on news reports from Washington Post, Bloomburg News, and elsewhere)

14) In view of developments around the United States a review of energy policy seems timely. Ohio ended its green energy grants fund and is considering repealing its RPS. Maine’s Governor is recommending major reductions in its RPS. New Jersey changed its Green Energy Fund equivalent from a grant to a loan. We should reduce or eliminate ours.

15) Energy efficiency is the lowest cost way to achieve lower emissions of air pollutants and greenhouse gas. A bill, HB27, to include energy efficiency as a credit in the RPS was tabled by the House Energy Committee last year. We should allow credits for energy efficiency and move HB27 to the House floor for a full vote.

16) The Bluewater Wind project was a direct result of the RPS. We have wasted 4 years and $4.4 million of electric ratepayer money going through the approval process for a project that was obviously over priced for the benefits from day one (Based on Delmarva Power information). It would have been better to consider conventional natural gas or nuclear plants for low cost, reliable power, and larger environmental benefits.

17) The primary resources being used to meet the RPS are wind and solar power. Wind power is generally produced at night when it is least needed and only when sufficient wind speeds are reached. Solar power is produced an average of 5 hours a day and only on sunny days. On partly sunny days solar facilities can go from full power to no power in 8 seconds. The number one attribute people want is reliability and wind and solar are unreliable. Repeal the RPS. (Based on CRI study)

18) Since wind and solar are unreliable back up power is needed. Back up is provided by fossil fuel fired power plants and this use diminishes and environmental benefits of wind and solar. Some back up is from spinning reserve, plants that are always on but not producing power so they have quick response. Some comes from peaking generators that come on quickly but are one third as efficient as base load power plants. Some comes from base load plants being run at less than peak capacity which means they are being run inefficiently. We might as well give up on wind and solar and just use the plants we have in the most efficient way.

19) Another reliability issue is cost. Texas has over 10,000 windmills in the state representing a significant portion of the state’s total generating capacity. Last summer, according to the Wall Street Journal, those windmills produced zero power during a two week heat spell. Normally the generation portion of power can be purchased for about $.08 to $.10/Kilowatt-hour. The loss of wind power meant utilities had to pay as much as $10.00/Kilowatt-hour during peak hours. Similar problems have been seen in Australia and the UK which depend on wind power in a big way. The UK experience was during a cold snap and lack of power led to brownouts and loss of heat. Problems seem to occur when wind reaches between 5 and 10% of grid capacity. Delaware may eventually obtain over 20% of its power from wind with the current RPS schedule. We need to reduce the target for renewable power in Delaware.

20) Wind power is not exactly benign. Alameda County Community Development Agency estimates the California Altamont Pass wind farm kills 10,000 birds a year, most of them from species protected by the Migratory Bird Treaty, including 70 Golden Eagles on the Endangered Species list. The Pennsylvania Game Commission estimates windmills in the state kill 10,000 bats annually, some of them from endangered species. An Oregon electric utility had to pay $10.5 million in fines for the death of 232 eagles that had flown into conventional power lines but wind farms have not been fined. This cost needs to be considered in the cost of renewable energy. Repeal the RPS.

21) Federal subsidies for wind power are scheduled to end at the end of 2012. They may not be extended. This will lead to higher cost for future wind farms which already cost more than conventional power. We need to reduce the target for renewable power in Delaware.

22) We were counting on the Bluewater Wind offshore wind farm to help meet the RPS schedule. According to the US Energy Information Agency offshore wind is two and half times as expensive as onshore wind because of the higher initial investment cost. Bluewater died because of the inability to obtain financing. That situation is unlikely to change. We need to reduce the target for renewable power in Delaware.

23) Federally financed “green” energy start ups are failing in large numbers. Consider Solyndra, Evergreen Solar, Beacon Power, and many others. We cannot rely on these types of products to bail us out if there is not enough electric generating capacity. We need to promote conventional power contingencies such as natural gas and nuclear and reduce our future reliance on questionable renewable power sources.

24) Last year’s addition of natural gas fired fuel cells to the list of acceptable RPS sources begs the question of why not include conventional natural gas fired generating plants. Without pollution controls, natural gas emits 50% of the greenhouse gas and 10% of the air pollutants of coal. The rush to support a possible fuel cell manufacturing plant in Delaware led to a $1.1 billion guaranteed payment for electricity from fuel cells that could be as much as $500 million over the cost for conventional power. Writing the law to guarantee the contract to one company, Bloom Energy, may violate the U.S Constitution Commerce Clause. We don’t need more projects like this. End the RPS. (Based on Fuel Cell Tariff documents)

25) According to Bluewater Wind their offshore wind project was expected to cost $2 billion to build. The same investment in an Advanced Natural Gas Combined Cycle electric generating plant would provide electricity at one quarter the price. The positive economic impact of lower cost electricity would add an additional 3500 jobs. In addition the natural gas plants would lower air pollution by twelve times more and lower greenhouse gas emission by seven times more than the offshore wind farm. We need to build more conventional power plants and less wind and solar. (based on US Energy Information Agency data).

26) A $2 billion investment in an Advanced Natural Gas Combined Cycle electric generating plant would provide electricity at one quarter the price of solar modules. The positive economic impact of lower cost electricity would add an additional 3500 jobs. In addition the natural gas plants would lower air pollution by eleven times more and lower greenhouse gas emission by seven times more than solar. We need to build more conventional power plants and less wind and solar. (based on US Energy Information Agency data).

27) A $2 billion investment in an Advanced Natural Gas Combined Cycle electric generating plant would provide electricity at one quarter the price of fuel cells. The positive economic impact of lower cost electricity would add an additional 3000 jobs. In addition the natural gas plants would lower air pollution by eight times more and lower greenhouse gas emission by nine times more than fuel cells. We need to build more conventional power plants and less wind and solar. (based on US Energy Information Agency data).

28) A $2 billion investment in an Advanced Natural Gas Combined Cycle electric generating plant would provide electricity at 40% lower price than onshore wind. The positive economic impact of lower cost electricity would add an additional 2900 jobs. In addition the natural gas plants would lower air pollution by five times more and lower greenhouse gas emission by three times more than onshore wind. We need to build more conventional power plants and less wind and solar. (based on US Energy Information Agency data).

29) Similarly, nuclear power could lower electric prices compared to any renewable energy source and emits no air pollution or greenhouse gas. New nuclear power plant designs offer lower initial cost and safer operation combined with shorter construction lead times. We should be considering nuclear power instead of wind and solar.

30) Environmental groups want to include the health impacts of lower air pollution when comparing renewable power sources with conventional power sources. The Delmarva Power 2010 Integrated Resource Plan did just that and found a conventional natural gas plant reduced health costs by more than a wind farm. The study actually undercounted the natural gas plant positive benefits by nine times but the plant still came out better. If we want lower pollution and better health we need to use natural gas and nuclear based power.

31) The RPS Act established the Renewable Energy Task Force and gave it power to create regulations to control the solar market. The Task Force adopted a Pilot Procurement plan that is keeping the cost of solar installations 25% higher than they would otherwise be. Fewer people can afford the initial cost, cost is add to state and federal grant programs, and electric ratepayers pay a higher price for electricity. In addition, the program favored the next customer for solar modules over existing owners. New customers will receive long term contracts for Solar Renewable Energy Credits of up to $312 each. Existing solar installations have seen SREC prices drop from $300 to $25 and have seen their revenue from this source drop thousands of dollars a year. The task force needs different direction and should really be disbanded.

32) The RPS encourages the use of small roof top solar over large solar farms. It also encourages electric distributors, such as Delmarva Power, to buy SREC’s rather than self build solar farms. The Delaware Electric Coop has recently announced plans to build their own solar farm and power will cost about a third as much as much as the Dover Sun Park (including SREC cost). The DEC solar farm will produce power at one quarter the cost of small roof top installations. We need to eliminate restrictions and allow the RPS to be met by the most affordable means possible to reduce the burden on electric ratepayers.

33) A study by the American Traditions Institute estimated Delaware’s RPS could increase the cost of electricity by 18% or $310 million a year in 2026. Individual homeowners could pay $269 a year more. The negative economic impact could reduce employment by over 2000 jobs. We can’t afford the RPS, especially when conventional power sources can provide lower cost, reliable power while providing larger environmental benefits for the same investment. Repeal the RPS.